A 27% of operators consider that inflation will be the greatest impactfollowed by 20% who think the elections will be held in November, according to the survey published on Tuesday.
The bonds and stocks rose at the end of last year in the hope that the slowing inflation will lead to sharp cuts in central bank interest rates this year. But those bets have been reduced and Friday’s surprising US jobs data sparked the biggest massive sell-off in Treasury bonds since September.
Markets are preparing for agreater volatility on the eve of the US presidential electionswith former President Donald Trump’s victory in the New Hampshire Republican primary bringing him closer to a rematch with the president, Democrat Joe Biden.
JPMorgan’s global head of digital markets, Eddie Wen, said increased focus this year on macro and risk events may create short-term volatility, with particular attention to the release of Monthly employment and inflation figures in the United States.
The recession fears, which topped last year’s survey, fell to third place with 18%, as economic growth is exceeding expectations, according to the survey.
The war in Europe, where the Russian invasion of Ukraine is two years old, and the Middle East, where the conflict between Hamas and Israel is being monitored for signs of escalation, They followed with 14%.
The market expects greater volatility
Operators hope that the market volatility remains its main challenge, but the percentage of respondents who place it in first place has fallen 18 percentage points since last year, to 28%.
The liquidity availability moved closer to the top of the list of trading challenges at 24%, up from 22% last year, while access to liquidity remained traders’ biggest concern regarding market structure.
Liquidity availability, the main challenge
Chi Nzelu, global head of electronic macro trading at JPMorgan, said that as the importance of electronic trading increases, it is becoming more important for investors. Investors have constant access to liquidity through a wide range of providers.
“They want to know that it will continue to be reliable even in times of crisis, as has generally happened in different markets in recent years,” he said.
The operators of the credit and equity markets spot markets pointed to the availability of liquidity as their main challenge.
“The structure of credit markets is becoming more complicated,” Wen said.
“There are more trading platforms to support the corporate bond trading along with the emergence of portfolio trading, block trading, larger operations, all becoming more electronic as time goes by.”
This means that selecting the best way to execute operations is becoming a key issue for investors, he said.